Merger of Mitchell International with top rival blocked by feds

SAN DIEGO – A proposed $1.4 billion merger of San Diego's Mitchell International with top rival CCC Information Services has been blocked, for now, after federal regulators raised antitrust objections.

A U.S. District Judge in Washington, D.C., on Monday granted a preliminary injunction to stop the deal from going forward until the U.S. Federal Trade Commission reviews the case.

The FTC says merging Mitchell and Chicago-based CCC would hinder competition for software that estimates auto collision repair costs and the value of totaled vehicles.

Mitchell and CCC announced the deal 11 months ago, saying the combined company would have $450 million in annual sales. Mitchell employs about 650 workers in San Diego.

The preliminary injunction states that the FTC has raised enough questions to prevent the merger until an administrative review by the FTC, which began Nov. 25, is complete.

The FTC has scheduled an administrative hearing on the case starting March 31.

Companies sometimes cancel mergers if preliminary injunctions are granted to the FTC, according to experts. After the administrative hearing, a lengthy trial is possible.

Mitchell and CCC said in a joint statement that they were weighing their options.

“There are a number of factors that both companies need to consider, including the interests of our customers, as we contemplate next steps,” Mitchell chief executive Alex Sun said in a statement. “These deliberations are an obvious high priority for both organizations.”

A call to Mitchell was not returned. CCC spokesman John Harris did not elaborate on what the companies said in the statement.

An FTC spokesman referred questions to court documents.

But in a statement, acting agency director David Wales said, “We brought this case because of the impressive body of evidence developed by staff demonstrating that the combination of these two competitors would substantially lessen competition, ultimately leading to higher prices and less innovation for consumers.”

Court documents contend the merger would reduce the number of companies providing software for estimating collision repairs and total losses.

Insurers must declare a vehicle a total loss when the expected repair costs reach a threshold set under state insurance laws – typically 65 percent to 75 percent of a vehicle's value.

Mitchell and CCC compete with Audatex North America, which is owned by Solera Holdings of San Diego.

The two companies disputed the FTC's claims in court documents. They claim Audatex is a strong competitor, and that other upstarts are already entering the marketplace.

Moreover, they claim that insurance companies sometimes perform total loss valuations themselves in-house, thereby providing a substitute for software sold by CCC, Mitchell and Audatex.